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Irish software sector: stuck on red?
Friday, March 14 2008
by The Register


Irish software companies are hungry for success but
struggling to break through the glass ceiling. 

Words like innovation and entrepreneurship get bandied around
so much that they have lost meaning and become bland
background music. Yet there is a reason that people keep
harping on about these terms and they aren't doing so in some
bid to become the next Muzak.



The Irish software sector is at a crossroads (there's one of
those terms again); it's been at the same crossroads for
quite a long time and the light has been stuck on red with a
queue of traffic building up.



Ireland is developing bucketloads of promising SMEs in the
sector but making the breakthrough to a larger scale is
proving difficult. The Irish Software Association (ISA) feels
that many are failing to move to the next level because they
aren't getting the rub they need from the public sector to
enable them to develop internationally.



"Irish software SMEs are finding it particularly difficult
to get access to public sector projects," said Shane
Dempsey, director of the ISA. "We have a whole heap of
businesses around the EUR2 million to EUR5 million mark [in
value] but without public sector backing they won't be able
to break out internationally," he said. "The public sector
has EUR9 billion to spend but there tends to be a
conservative focus on cost rather than value for money."



This focus on the immediate bottom line rather than long-term
benefit coupled with a complicated application structure is
making it difficult for indigenous software businesses to get
involved in government contracts.



The picture is changing though, albeit slowly. The Government
has shown an interest in shifting the focus, which was in no
small way signified when they opted to appoint Michael Ahern
to the new post of Minister for Innovation Policy.



The ISA feels that the steps being made are in the right
direction but need to come faster. "There is a willingness
now on the part of the public sector to look at implementing
policies that might make it easier for Irish software
companies to apply for contracts," said Dempsey. "Things
are moving along but they need to move faster."



On the private side the industry's prospects are looking a
tad brighter. People in private industry essentially speak
the same language which makes it easier to press forward
quickly with projects. There are still limitations though as
that glass ceiling continues to hamper Irish businesses
looking to go head-to-head with the big boys in the US and
Europe.



In order to truly break out and compete with these businesses
Irish firms need to be able to do battle on foreign soil as
the local market offers too small a customer base to enable
this kind of growth. "The Irish opportunity is not in what
Irish people buy; it's in what Irish people sell," said
Colm Lyon, managing director of payments software firm
Realex.



Lyon recently spoke at the Irish Web Technology Conference
(IWTC). The event is part of a seven-conference series known
as IxTC 2008 series aimed at mobilising the Irish software
community into demonstrating that they are involved in an
exciting and rewarding sector.



The series is being run by IrishDev.com, an organisation that
aims to help ICT professionals network and collaborate, and
part of the event's aim is to help those in the sector
realise that they can go head-to-head with their counterparts
overseas.



Ivan MacDonald, chief executive of Java and Bluetooth
software firm Rococo Software, also spoke at the IWTC and he
feels there needs to be shift in the focus of investment
within the private sector.



"Traditionally Ireland has been very good at developing
enterprise software businesses," said MacDonald. "There
are a lot of start ups in internet-based industries such as
photo and video storage and we haven't really had any big
successes there yet."



There is a recognition amongst both industry and government
agencies that internet-based applications present an
opportunity for indigenous software firms to develop.
"Enterprise Ireland is now backing a lot of these firms and
that wouldn't have happened two or three years ago," said
MacDonald. "There has been a mindset shift towards these
kinds of industries."



This change of viewpoint needs to come faster though as there
is still a tendency to focus heavily on the traditional solid
options rather than the innovative concepts that are coming
through.



"An awful lot of focus is on the enterprise side. The
Government needs to focus more on the internet side," said
Paul Walsh, chief executive of compliance and certification
software firm Segala Software.



It's not just those supporting the industry that need to
adjust their focus. Irish software firms themselves need to
take a different approach to the international markets they
target and pay more heed to business outside the US.



"Look east, look to Europe. Collectively Europe is larger
than the US and is probably in better health economically,"
said Sean Hanley, co-founder of business software firm
Exoftware.



If both government and industry take a more widespread
approach to the type of industries supported and the markets
targeted the future of sector could be promising. Failure to
make this progress though will result in even more businesses
being stuck in traffic.